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QBE LMI Residential Property Market Overview October 2008
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QBE LMI Residential Property Market Overview October 2008
description
QBE LMI Residential Property Market Overview October 2008. Recent Events. Shift in world economic outlook – higher cost of funds. But sharp decline in interest rates locally – recent 1% fall in cash rate in October 2008. First Home Owner’s Grant $14,000 for established $21,000 new - PowerPoint PPT Presentation
Transcript of QBE LMI Residential Property Market Overview October 2008
QBE LMI Residential Property Market OverviewOctober 2008
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Recent Events
Shift in world economic outlook – higher cost of funds.
But sharp decline in interest rates locally – recent 1% fall in cash rate in October 2008.
First Home Owner’s Grant> $14,000 for established> $21,000 new
Offsets in other sectors of the economy:> Lower $AU;> Increased exports;> Boost to dwelling construction.
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Year Ended June 2004 2005 2006 2007 2008 2009 2010 2011Private Consumption 5.4 4.4 2.6 4.0 3.9 2.1 2.8 4.5Private Investment 8.1 5.1 8.7 5.4 8.3 4.3 1.2 7.2Public Consumption 3.9 3.8 2.5 2.9 3.4 2.8 2.1 3.3Public Investment 2.5 9.3 9.3 8.3 11.0 3.8 1.0 6.5GNE 6.4 4.7 3.8 4.4 5.4 2.3 2.4 5.3Exports 2.1 3.1 2.2 3.7 4.1 8.4 7.2 7.1Imports 13.0 12.1 7.2 8.9 12.2 5.9 2.5 9.6GDP 4.0 2.8 3.0 3.3 3.7 2.6 3.3 4.6
Source: ABS Data, BIS Shrapnel
GDP Growth Forecasts (2005/2006 Prices)Forecasts
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Year Ended June 2004 2005 2006 2007 2008 2009 2010 2011Total Dwellings 3.1 -0.8 -4.3 2.4 1.5 4.1 8.5 11.3Real Estate Transfer -0.7 -16.6 2.3 -0.9 0.4 -6.5 17.0 13.5
Residential and Property - Subtotal 2.2 -4.4 -3.0 1.7 1.3 2.0 10.0 11.7
New Plant and Equipment 16.2 15.2 15.1 3.4 11.7 5.2 -3.5 9.5
New Non-Dwelling Construction 6.8 9.0 19.9 12.4 10.7 4.7 -2.8 -1.0
New Business Investment - Subtotal
12.7 12.0 15.8 7.3 11.7 5.3 -2.5 5.0
New Private Investment - Subtotal 8.1 5.1 8.7 5.4 8.3 4.3 1.2 7.2
Source: ABS Data, BIS Shrapnel
Private Investment Growth Forecasts (2005/2006 Prices)Forecasts
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Interest Rates
90 92 94 96 98 00 02 04 06 08 10 -2
-1
1
2
3
4
6
7
8
9
11
12
13
14
16
17
18
0
5
10
15
Percent
HousingVariable Rate
Cash Rate
C.P.I.
Forecast
4.5
8.1
Source: RBA, ABS data, BIS ShrapnelQuarter Ended June
7.7
9.45
8.1
6.3
2.1
7.8
3.8
3.1
2.9
7.3
5.5 5.5
5.8
6
Sydney
Melbourne
Home Loan AffordabilityProportion of Monthly Earnings as Repayment
88 90 92 94 96 98 00 02 04 06 08 10 20
25
30
35
40
50
60
70
80
90
Brisbane
54
5655
65
45
57
55
Year Ended June Source: BIS Shrapnel, ABS data
60
Forecast
50494949
47 4848
7
Adelaide
Home Loan AffordabilityProportion of Monthly Earnings as Repayment
88 90 92 94 96 98 00 02 04 06 08 10
20
25
30
35
40
45
50
Perth
44
49
52
43
Year Ended June Source: BIS Shrapnel, ABS data
50
43
46
39
4343
Forecast
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New Dwellings Established Dwellings
2004/05 2005/06 2006/07 2007/08 2004/05 2005/06 2006/07 2007/08
New South Wales -11 9 3 -6 -10 13 10 -2 Victoria 0 6 4 -4 6 7 8 0 Queensland -11 10 25 -2 -6 13 14 -8 South Australia -5 8 13 -4 6 5 6 -7 Western Australia 7 14 -12 -16 13 16 -12 -9 Tasmania 13 -5 -1 0 -11 9 11 2 Northern Territory 46 15 -28 -12 38 24 -24 -11 A.C.T. -14 8 14 -13 -19 13 31 -3 Australia -4 9 5 -6 -1 12 7 -4
Source: ABS Data
Loan Approvals for Owner-Occupied Dwellings (% Change)
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Jun qrt 07 Sep qtr 07 Dec qrt 07 Mar qrt 08 Jun qtr 08 Jul-Aug
08New South Wales 8 6 10 -3 -20 -26 Victoria 10 5 10 1 -18 -23 Queensland 15 10 9 -12 -32 -41 South Australia 2 -4 7 -9 -20 -25 Western Australia -15 -10 1 -5 -27 -31 Tasmania 10 3 14 10 -19 -28 Northern Territory -27 -16 0 -17 -13 -28 A.C.T. 35 13 4 -8 -25 -24 Australia 6 3 8 -5 -23 -30
Source: ABS Data Source: ABS Data
Total Dwellings
Loan Approvals for Owner-Occupied Dwellings (% Change)
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Avg 1997/98 2004/05 2005/06 2006/07 2007/08 Jul- Aug 08to 2003/04 Ann % var
New South Wales 31,997 27,734 36,499 38,986 38,480 -14Victoria 28,346 28,532 33,255 33,071 34,089 -16Queensland 22,910 20,130 26,953 31,324 27,361 -41South Australia 7,260 6,612 7,912 8,443 8,309 0Western Australia 15,108 16,328 17,746 13,789 16,445 -14Tasmania 2,048 1,681 2,220 2,073 2,141 20Northern Territory 989 1,485 1,912 1,119 930 7Aust. Capital Territory 1,776 1,162 1,498 1,792 1,394 -20Australia 110,433 103,664 127,995 130,597 129,149 -19
Source: ABS Data
Number of Loans to First Home Buyers
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Jun qrt 07 Sep qtr 07 Dec qrt 07 Mar qrt 08 Jun qtr 08($m) % Var ($m) % Var ($m) % Var ($m) % Var ($m) % Var
New South Wales 7,472 10 6,231 9 5,676 6 4,850 -12 5,115 -32 Victoria 4,173 26 4,028 28 4,441 49 3,717 22 3,929 -6 Queensland 4,795 39 4,533 45 4,411 25 3,805 -6 3,651 -24 South Australia 1,202 32 1,212 45 1,197 41 1,035 12 1,080 -10 Western Australia 2,929 -3 2,591 -4 2,527 10 1,990 -14 2,212 -24 Tasmania 166 33 170 40 146 11 135 7 147 -12 Northern Territory 145 25 125 23 116 -12 116 -14 117 -19 A.C.T. 334 32 288 40 286 44 249 19 247 -26 Australia 21,233 18 19,197 20 18,822 21 15,925 -3 16,518 -22
Source: ABS Data
Value of Investment Loans for the Purchase of Property for Rent/Resale
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Net Overseas Migration
88 90 92 94 96 98 00 02 04 06 08 10
25
50
75
125
150
175
225
0
100
200
Thousands
Year Ended June Source: BIS Shrapnel, ABS data
Forecast
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Net Overseas Migration
90 92 94 96 98 00 02 04 06 08 10
2.5
5
7.5
25
50
75
1
10
Thousands
Year Ended June Source: BIS Shrapnel, ABS data
South Australia
Queensland
Western Australia
New South Wales
Victoria
Forecast
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Net Interstate Migration
90 92 94 96 98 00 02 04 06 08 10
-30
-10
10
30
50
-40
-20
0
20
40
Thousands Forecast
Year Ended June Source: BIS Shrapnel, ABS data
New South Wales
Queensland
WesternAustralia
South Australia
Tasmania
Victoria
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Net Population Increase
88 90 92 94 96 98 00 02 04 06 08 10 -10
10
30
50
70
90
110
0
20
40
60
80
100
Thousands Forecast
Tasmania
Year Ended June Source: BIS Shrapnel, ABS data
WesternAustralia
South Australia
Queensland
New South Wales
Victoria
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DwellingCommencements
(thousands)
New South Wales 41.4 42.6 50.1 30.2Victoria 42.2 41.9 46.1 42.0Queensland 39.2 40.8 45.2 42.6South Australia 9.7 10.5 12.0 12.0Western Australia 19.5 23.9 25.0 21.6Tasmania 2.6 2.2 2.2 2.9Northern Territory 1.4 1.7 1.7 1.1A.C.T. 2.3 2.7 2.4 2.4Australia 158.3 166.2 184.9 154.6f = forecast. NB: Australia may not equal sum of the states due to rounding Source: BIS Shrapnel & ABS data* Includes conversions
2001/02 - 2005/06 2007/08
Underlying Demand Annual Average
(thousands)2006/07 - 2007/08
2008/09 - 2012/13
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Underlying Demand Annual
Average (Thousands)
2008/09 - 2012/13 2007 2008 2009 2010 2011New South Wales 50.1 16.9 29.4 49.7 65.5 71.7Victoria 46.1 7.6 10.8 12.4 16.8 14.5Queensland 45.2 16.5 16.2 17.2 18.9 14.0South Australia 12.0 -0.2 -1.5 -1.5 -2.7 -3.0Western Australia 25.0 0.1 0.7 3.1 7.4 8.5Tasmania 2.2 -1.0 -1.6 -2.2 -2.5 -2.7Northern Territory 1.7 -0.1 0.4 0.6 1.3 1.1A.C.T. 2.4 0.4 0.5 0.7 0.6 0.5Australia 184.9 40.0 54.9 80.2 105.4 104.6
Source: BIS Shrapnel & ABS data
Dwelling Stock Deficiency As at June
(Thousands)
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Sydney Melbourne Brisbane Adelaide Perth Hobart Canberra Darwin1992 3.0 4.3 5.4 5.4 5.7 4.6 3.4 n/a1993 2.9 3.8 6.0 4.8 5.0 6.1 5.1 n/a1994 3.0 3.1 4.9 5.5 4.7 7.0 5.0 n/a1995 1.3 1.9 4.5 5.2 3.5 6.6 4.4 n/a1996 1.6 1.5 4.0 3.4 4.9 5.6 3.4 1.8
1997 2.3 2.0 4.2 2.6 2.7 6.2 4.3 5.81998 2.6 1.7 4.7 1.9 2.5 6.9 2.9 14.11999 1.8 3.6 5.4 2.5 2.4 8.3 1.0 14.12000 2.2 3.5 n/a 4.5 3.0 4.1 2.3 6.42001 3.3 3.9 n/a 3.6 4.2 2.0 3.0 9.0
2002 4.6 3.8 4.1 n/a 4.5 2.3 3.6 5.02003 4.4 3.9 2.3 2.8 4.5 2.8 3.5 7.12006 2.1 1.7 2.2 1.6 1.9 2.2 2.3 2.42007 1.4 1.4 1.5 1.3 2.1 2.3 2.4 1.2
2008 Mar 1.0 1.6 2.2 1.7 1.4 2.3 0.5 2.02008 June 1.1 1.0 n/a 1.5 2.8 n/a n/a n/a
n/a: data not available Source: R.E.I.A.
Residential rental vacancy rates (%)
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Real House Price Sydney ($'000)
House PriceSydney ($'000)
Commencements ('000) NSW
(Y/E Quarter)
Forecast
New South WalesResidential Building and Property Cycle
88 90 92 94 96 98 00 02 04 06 08 10
30
50
70
150
200
300
500
700
100
Source: ABS data, BIS Shrapnel & R.E.I.A. dataY/E June
+29
+3
+1
+23
-1 -3 -3
+1
+9+1+5
+1+6
+1
-9
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QueenslandResidential Building and Property Cycle
88 90 92 94 96 98 00 02 04 06 08 10 20
25
30
40
50
60
70
80
150
200
250
300
400
500
100
Forecast
House PriceBrisbane ($'000)
Real House PriceBrisbane ($'000)
Y/E June Source: ABS data, BIS Shrapnel & R.E.I.A. data
+9-2
+14
+7
+8
+10
-2
+8
+12
+9+1
+5
Commencements ('000) Qld
(Y/E Quarter)
+12 +6
+6
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VictoriaResidential Building and Property Cycle
88 90 92 94 96 98 00 02 04 06 08 10 20
30
40
50
60
80
150
200
300
400
500
100
Y/E June
Real House Price Melbourne ($'000)
House PriceMelbourne ($'000)
Source: ABS data, BIS Shrapnel & R.E.I.A. data
+10
+0
+4+5
+5
+8+5
Commencements ('000) VIC
(Y/E Quarter)
+10
+9
Forecast
+2
+12+9
-2+10
-1
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Western AustraliaResidential Building and Property Cycle
88 90 92 94 96 98 00 02 04 06 08 10
15
30
50
70
150
300
500
100
Real House PricePerth ($'000)
House PricePerth ($'000)
Commencements ('000)Western Australia
(Year Ended Quarter)
Forecast
Source: ABS data, BIS Shrapnel & R.E.I.A. dataY/E June
+10
-4
+3+11
-1
+3+6
+13-1 +2
-1-6
+9-11
-4
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South AustraliaResidential Building and Property Cycle
88 90 92 94 96 98 00 02 04 06 08 10 5
7
15
30
50
70
150
300
10
100
Real House Price Adelaide ($'000)
House PriceAdelaide ($'000)
Source: ABS data, BIS Shrapnel & R.E.I.A. dataY/E June
+5+5 +2
+3
+12+0 +2
Forecast
+6+5
+9
+4
Commencements ('000)South Australia
(Year Ended Quarter)
+17
+7
+7
-7
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TasmaniaResidential Building and Property Cycle
88 90 92 94 96 98 00 02 04 06 08 10
15
25
35
50
70
150
250
350
10
100
Real House PriceHobart ($'000)
House PriceHobart ($'000)
Source: ABS data, BIS Shrapnel & R.E.I.A. dataY/E June
Commencements('00) Tasmania(Y/E Quarter)
-9 -6
+0 -2+3+1
+5 +5
+12+6
Forecast
+4
+1+12
+2
+10
25
Northern TerritoryResidential Building and Property Cycle
88 90 92 94 96 98 00 02 04 06 08 10 6
15
20
30
60
150
200
300
10
100
House Price Darwin($'000)
+13
Source: ABS data, BIS Shrapnel & R.E.I.A. dataY/E June
+11
+0-8 +8
+12
+4-1 +5
Forecast+7
+8+8
Commencements ('00)Northern Territory
(Year Ended Quarter)
Real House PriceDarwin ($'000)
+2
+3
+26
26
Australian Capital TerritoryResidential Building and Property Cycle
88 90 92 94 96 98 00 02 04 06 08 10
15
25
40
75
150
250
400
10
100
House PriceCanberra
($'000)
Commencements ('00) ACT(Y/E Quarter)
Source: ABS data, BIS Shrapnel & R.E.I.A. dataY/E June
+12
+0
+9
+10-1-1 +2
Forecast+6
+12+3
Real House PriceCanberra ($'000)
+7+2
+4
+0+26
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SummaryRental market tightening, rents accelerating (but yields still low) – pressure on supply.
Weakening financial and economic environment to continue to impact on purchaser confidence.
Improved affordability not expected to gain traction until 2009/10, as economic conditions stabilise.
Affordability to remain constrained, despite recent reductions in interest rates– price rises to be more aligned with wages growth.
Summary
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Summary
Forecast cumulative median house price growth between 2008 and 2011
>Sydney +15%>Melbourne +16%>Brisbane +19%>Adelaide +16%
>Perth +12%>Hobart +16%>Darwin +11%>Canberra +19%
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Summary – risk factors
Deterioration of world economies and its impact on Australia.
Duration of the credit squeeze and the cost of funds. Larger fall in interest rates. Magnitude of decline in commodity prices and
subsequent impact on mining investment.
